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Seattle SuperSonics relocation to Oklahoma City

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The interior of KeyArena during the SuperSonics' last home game in Seattle, played against the Dallas Mavericks.

The Seattle SuperSonics relocation to Oklahoma City was a successful effort by the ownership group of the Seattle SuperSonics to relocate the team from Seattle, Washington to Oklahoma City, Oklahoma. The team began play as the Oklahoma City Thunder in the 2008–09 NBA season, after becoming the third National Basketball Association (NBA) franchise to relocate in the 2000s.

After failed efforts to persuade Washington state government officials to provide $220 million in public funding to update KeyArena, the SuperSonics' ownership group, led by Howard Schultz, sold the team to the Professional Basketball Club LLC (PBC), an investment group headed by Oklahoma City businessman Clay Bennett. A condition of the sale was that PBC execute a "good faith effort" to secure a suitable arena in the Seattle area for the team. After failing to persuade local governments to pay for a new $500 million arena complex, Bennett's group notified the NBA that it intended to move the team to Oklahoma City and requested arbitration with the city of Seattle to be released from its lease with KeyArena. When the request was rejected by a judge, Seattle sued Bennett's group to enforce the lease that required the team to play in KeyArena through 2010. On July 2, 2008, a settlement was reached where PBC would pay $45 million in exchange for breaking the lease, and an additional $30 million if Seattle was not given a replacement team in five years, among other conditions.

In months prior to the settlement, Seattle publicly released email conversations that took place within Bennett's ownership group alleging they indicated that some members of the group had a desire to move the team to Oklahoma City prior to its purchase in 2006. The city used these conversations to argue that ownership failed to negotiate in good faith and as a result, Schultz filed a lawsuit seeking to rescind the sale of the team and transfer the ownership to a court-appointed receiver. The NBA claimed the lawsuit was void because Schultz signed a release forbidding himself to sue Bennett's group but also argued that the proposal would have violated league ownership rules. Schultz dropped the case before the start of the 2008–09 NBA season. Ten years later, in 2019, Schultz accepted full responsibility for the sale. "Selling the Sonics as I did is one of the biggest regrets of my professional life. I should have been willing to lose money until a local buyer emerged. I am forever sorry."[1]

Sale of team

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After the sale of the SuperSonics, Seattle Mayor Greg Nickels pledged he would fight to keep the team from relocating to Oklahoma City.

In 2001, ownership of the Seattle SuperSonics transferred from Barry Ackerley to Starbucks CEO Howard Schultz. In the five years Schultz owned the SuperSonics, the team suffered heavy financial losses due to Schultz's plan to sell, which led Schultz to seek funding from the Washington State Legislature for a newer, more modern arena in the Puget Sound region as a replacement for KeyArena at Seattle Center.[2] On July 18, 2006, the Basketball Club of Seattle, led by Schultz, sold the SuperSonics and its sister team, the Women's National Basketball Association (WNBA)'s Seattle Storm, after failing to reach an agreement with the city of Seattle over a publicly funded $220 million expansion of KeyArena.[3][4] KeyArena was remodeled in 1995 and was the NBA's smallest venue, with a seating capacity of 17,072.[5][6] After failing to find a local ownership group to sell the team to, Schultz talked to ownership groups from Kansas City, St. Louis, Las Vegas, San Jose and Anaheim before agreeing to sell the team to an ownership group from Oklahoma City, which pursued an NBA franchise after hosting the New Orleans Hornets franchise successfully for two seasons as the city of New Orleans rebuilt from Hurricane Katrina. The sale to Clay Bennett's ownership group for $350 million[3][4] was approved by NBA owners on October 24, 2006.[7][8][9] Terms of the sale required the new ownership group to "use good faith best efforts" for a term of 12 months in securing a new arena lease or venue in the Seattle metropolitan area.[10] Further complicating matters, the voters of Seattle passed Initiative 91,[11] a measure that virtually prohibited the use of public money on sporting arenas.[12] This lack of taxpayer or government financial support for the team, combined with earlier losses under recent ownership groups, "likely doomed the Sonics' future in the city".[11]

On February 12, 2007, Bennett proposed using tax money to pay for a new $500 million arena in Renton, Washington, a suburb of Seattle.[6][13] After failing to reach a deal by the end of the legislative session, Bennett gave up his attempt in April 2007.[14] On November 2, 2007 the team announced it would move to Oklahoma City as soon as it could get out of its KeyArena lease.[15] Seattle's mayor, Greg Nickels, maintained a stance that the SuperSonics were expected to stay in Seattle until their lease expired in 2010 and said the city did not intend to make it easy for Bennett to move the team early. Over concerns the city would accept a buyout of the lease, a grassroots group filed a citywide initiative that sought to prevent the city from accepting such an offer from Bennett's group.[16] The Seattle City Council later unanimously passed an ordinance modeled after the initiative.[17]

On August 13, 2007, Aubrey McClendon, a minor partner of Bennett's ownership group, said in an interview with The Journal Record (an Oklahoma City newspaper) that the team was not purchased to keep it in Seattle but to relocate it to Oklahoma City. Bennett later denied such intentions, saying McClendon "was not speaking on behalf of the ownership group". Due to his comments, McClendon was fined $250,000 by the NBA.[18] More than ten years later, in 2019, Schultz accepted responsibility for the sale. "Selling the Sonics as I did is one of the biggest regrets of my professional life. I should have been willing to lose money until a local buyer emerged."[19]

Relocation effort

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On September 21, 2007, Bennett applied for arbitration on the issue of whether the team could break its lease in 2008.[20] Arguing that the lease does not allow for arbitration on the issue of occupancy, the city of Seattle filed for declaratory relief on September 24. The motion asked the King County Superior court to reject the arbitration request and enforce the Specific Performance Clause of the Sonics' lease, which required the team to play at KeyArena through 2010. United States District Court Judge Ricardo Martinez denied the request for arbitration on October 29, saying that the "arguments ignore the clear language of Article II, which states that PBC’s use and occupancy rights with respect to the Premises and the Term of this Agreement shall end on September 30, 2010.”[21]

KeyArena, rebuilt in 1995, was the smallest venue in the NBA at the time of the Sonics' move, seating 17,072 for basketball.[3][5][6]

Two days after Bennett's October 31, 2007 deadline passed for public financing of a new arena, he informed NBA commissioner David Stern that the ownership group intended to move the Sonics to Oklahoma City as soon as it was legally possible. The timing of the announcement, one day after the Sonics' home opener, drew critical comments from Tom Carr, Seattle's attorney, who said "Mr. Bennett's announcement today is a transparent attempt to alienate the Seattle fan base and follow through on his plan to move the team to Oklahoma City ... Making this move now continues the current ownership's insulting behavior toward the Sonics' dedicated fans and the citizens of the city."[22] Bennett also reiterated that the team was not for sale and dismissed attempts by local groups to repurchase the team.[15]

On February 15, 2008, the Sonics' ownership group gave the city of Seattle a one-day deadline to accept a $26.5 million offer that would buy out the Sonics' lease in KeyArena and pay off what the ownership group claimed was the value of debts on the arena.[23] The city rejected the offer.[24]

The prospect of expanding KeyArena resurfaced on March 6, 2008, when Microsoft CEO at that time Steve Ballmer, promised that his investor group would pay half of the $300 million needed for an extensive renovation; the rest was to be provided by the city and county.[25] However, when the state legislature did not give approval for the county to provide funds by an April 10 deadline, Seattle Mayor Greg Nickels said that the effort had failed and the city's hopes rested in its lawsuit.[26]

Oklahoma City's preparations

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Paycom Center (then known as the Ford Center), which seats 18,203 for basketball, was completed in 2002, and has received public funding for renovation.

In anticipation of an NBA team, and led by Mayor Mick Cornett, who had successfully lobbied for the previous temporary relocation of the New Orleans Hornets to Oklahoma City, the voters of that city approved a $120 million renovation of the Ford Center on March 3, 2008, including construction of a new NBA practice facility.[27][28] After a tour of downtown Oklahoma City, a subcommittee of three NBA owners recommended that the league approve the move.[29] On March 14, Bennett reached a preliminary agreement with Oklahoma City on a 15-year lease of the Ford Center that was finalized by the Oklahoma City Council and the Sonics’ ownership group two weeks later.[30][31][32] The Oklahoma State Legislature later approved a bill to provide tax breaks and other incentives if the team relocated.[33]

NBA owners gave approval of a potential SuperSonics' relocation to Oklahoma City on April 18 in a 28–2 vote by the league's Board of Governors; only Mark Cuban of the Dallas Mavericks and Paul Allen of the Portland Trail Blazers voted against the move. The approval meant the Sonics would be allowed to move to Oklahoma City's Ford Center for the 2008–2009 season after reaching a settlement with the city of Seattle.[34][35]

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In 2006, a group of Seattle residents created Save Our Sonics and Storm ("SOS") to rally support for a permanent professional basketball presence in Seattle. The "and Storm" portion of the name was dropped when the WNBA Storm was sold to local ownership. On June 16, 2008, the group organized a well-publicized rally, which reportedly drew over 3,000 participants, at the U.S. District Courthouse in Seattle to protest the proposed relocation of the team.[36] The rally was held on the first day of the city of Seattle's lawsuit against the PBC to enforce the remaining two years on the KeyArena lease.

Lawsuits

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City of Seattle v. Professional Basketball Club LLC

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Seattle filed a lawsuit on September 23, 2007 in an attempt to keep the Sonics from leaving before the end of their lease in 2010.[37] The trial was set for June 16, 2008.[26] On April 10, 2008, Seattle asked the Federal District Court to order the NBA to release documents related to the financial situation of each team, the claim that the SuperSonics' lease with KeyArena was financially unworkable, and the league's involvement in requiring PBC to make a good-faith effort to stay in Seattle. On April 28, the trial's presiding judge, Loretta Preska, ruled that the NBA must supply the internal documents about the possible relocation of the Sonics that the city of Seattle had requested. In addition, the judge said that Stern could be deposed at a later day should the need arise.[38] The city hoped the documents would aid in building its legal case, and cited an email conversation among members of the ownership group that suggested they were privately discussing intent to move the team while publicly insisting that they would not attempt to do so.[39]

Former U.S. Senator from Washington Slade Gorton represented Seattle as their attorney.

The ownership group filed a motion saying that the lawsuit and the release of the emails by the city were meant to drive up the cost of leaving Seattle and force the ownership group to sell the team. The motion requested that all emails and other records be released to the team. Slade Gorton, lead attorney for the city, responded by pointing out that it was PBC that started the fight that led to the lawsuit when they filed for arbitration to break the lease.[40][41] The motion was denied by the presiding judge, who said the team failed to make a "good-faith effort" to resolve the dispute and that it failed to show that trial preparations were hindered by the records not being made public. However, the ruling also said the team could bring up the issue again if it could prove the relevance or the confidentiality of the records.[42]

On April 21, 2008, Gorton said he would be open to a settlement if the league promised a replacement team for Seattle. He said it was "highly unlikely" that the Sonics would stay and indicated the city should instead focus on gaining a replacement team, but noted that local governments would need to be willing to fund an expansion of KeyArena first.[43]

When Bennett's group requested that the trial also decide the team's financial obligations to KeyArena should its lease be broken, Seattle's lawyers requested a six-month delay in the trial date in order to prepare for the additional issues, arguing that the ownership group's request would "dramatically change the scope" of the case and would require considerable preparation time to determine damages.[44] The trial's presiding judge denied the motion by Bennett's group on March 6, noting that the team would have needed to make the request at the scheduling conference. A second trial would therefore need to have been held to determine the team's financial obligations.[45]

Attorneys made their closing arguments in the city's case on June 26 and Judge Marsha J. Pechman announced that she would issue her ruling on the following Wednesday.[46] On July 2, hours before Judge Pechman was to release her ruling, it was announced that the team and the city had reached a settlement where PBC would pay the city $45 million immediately in exchange for breaking the lease, and an additional $30 million if Seattle was not given a replacement team in five years. According to the conditions of the settlement, the Sonics' name and colors could not be used by the team in Oklahoma City, but could be taken by a future team in Seattle, although no promises for a replacement team were given. The Oklahoma City team would retain the franchise history of the SuperSonics, which could be "shared" with any future NBA team in Seattle.[47][48] The team moved to Oklahoma City immediately and announced it would begin play in the 2008–09 season.[49][50]

Basketball Club of Seattle LLC v. Professional Basketball Club LLC

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Starbucks Chairman and CEO Howard Schultz, who led the Basketball Club of Seattle, sold the SuperSonics to Clay Bennett in 2006. He was sued for breach of contract in 2008, after Schultz's attorneys accused Bennett of misrepresenting himself.

The release of email conversations between members of Bennett's group[51] prompted former Sonics' owner Howard Schultz to file a lawsuit that sought to rescind the sale of the team and alleged that Bennett's group used fraud and misrepresentation to purchase the Sonics without making a "good faith best effort" to keep them in Seattle as mandated by the original sales contract.[52] Bennett said the emails were misinterpreted and that he had spent millions of dollars in attempting to keep the team in Seattle.[53]

The lawsuit was filed on April 22, 2008 at the U.S. District Court for the Western District of Washington. It sought, among other things, an injunction to prevent the Sonics from being relocated from Seattle to Oklahoma City. The suit further requested that the franchise be placed in a constructive trust and no longer in the ownership of PBC.[54] On May 20, 2008, Schultz's attorney added alleged a breach of contract as a third cause of action against Bennett.[10] Chicago-based attorney and ESPN senior writer Lester Munson said that while the remedies Schultz sought were "without precedent in the sports industry", he did believe that both the Schultz case and Seattle's lease case presented "serious problems" for Bennett.[55]

On May 9, 2008, Oklahoma City officials declared intent to sue for damages and a forced relocation of the SuperSonics if Schultz's lawsuit succeeded and the subsequent ownership did not relocate. In a legal letter to Schultz, Oklahoma City's attorney said that the Sonics were legally bound to relocate to Oklahoma City at the end of the KeyArena lease regardless of who owned the team. The letter stated that the city had "valid and enforceable agreements with the Team requiring it relocate to Oklahoma City at the end of the current lease with the city of Seattle."[28] Schultz's attorney replied to the letter saying the lease agreement was with PBC, not BCOS, and that the city began improvements on Ford Center at their own risk prior to conclusion of the pending litigation.[56]

The NBA filed a motion to intervene with Seattle's federal court on July 9, 2008, claiming that Schultz's lawsuit would interfere with the stable operation of the franchise and the transfer of ownership would violate NBA regulations unless the team was put under control of NBA Commissioner David Stern. The league also claimed that Schultz signed a release forbidding him to sue Bennett's ownership group as a condition of the NBA's approval of the original sale.[57] Weeks later, Schultz requested that two separate trials be used to determine whether Bennett's group committed fraud and subsequently determine a remedy. On August 29, 2008, shortly after the court denied his request and ruled that the NBA could intervene in the case, Schultz said his legal team no longer believed the case could be won. He announced he would drop the lawsuit, saying in a prepared statement, "The prevailing wisdom of many in the Seattle community and the advice of key members of the BCOS is that Seattle's best chance for a professional basketball franchise is to end this litigation and allow the City, State Legislature and other parties to begin the necessary fence mending with the NBA."[58][59]

Distribution of assets

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According to the terms detailed in the settlement agreement, items associated with the SuperSonics' history in Seattle, including trophies, banners, and retired jerseys, stayed in the city and were placed in the Museum of History & Industry (MOHAI). Other items such as televisions, radios, headphones, CDs, chairs, and equipment were shipped to Oklahoma City after the Seattle Storm finished the 2008 WNBA season.[60]

Chronicles

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In 2009, Seattle-based filmmakers released Sonicsgate, a documentary chronicling the history of the SuperSonics, especially including the team's relocation to Oklahoma City.[47]

In 2012, the book Big League City: Oklahoma City's Rise to the NBA by now mayor David Holt chronicled the story from Oklahoma City's perspective.[61]

See also

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References

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  2. ^ "NBA Team Valuations". Forbes. January 25, 2007. Archived from the original on April 21, 2018. Retrieved June 18, 2017.
  3. ^ a b c Angela Galloway; Phuong Cat Le (July 18, 2006). "Sonics sold to ownership group from Oklahoma City". Seattle Post-Intelligencer. Archived from the original on August 29, 2022. Retrieved July 18, 2006.
  4. ^ a b "Basketball Club of Seattle Announces Sale of Sonics & Storm". SuperSonics.com. NBA Media Ventures, LLC. July 18, 2006. Archived from the original on July 19, 2006. Retrieved July 19, 2006.
  5. ^ a b "SONICS: KeyArena Information". SuperSonics.com. NBA Media Ventures, LLC. July 24, 2006. Archived from the original on July 24, 2006. Retrieved May 4, 2015.
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